Can I Pay Less Customs Duty and VAT if I Import Capital Goods in the UK

Yes, you can. You can claim relief from customs duty and VAT if you will be importing goods in the UK.

Capital goods

So what are capital goods? Capital goods are part of your business operations. These goods are used by your business to produce other goods that are up for sale. Capital goods are in your disposal, and they can’t be sold to your customers.

If your business overseas is planned to be transferred to the UK, your capital goods should be shipped to the UK. If you’re not familiar about paying less customs duty and VAT, you might be paying more than necessary.

How can I be eligible for paying less in customs duty and VAT?

There are certain eligibility requirements to have before having these perks. There are do’s and don’ts too in filing your claim.

You are eligible for paying less customs duty and VAT if you are transferring a business to the UK that:

1. Has no operations whatsoever outside the EU;
2. Has new operations being carried out within the EU or UK of the same industry or nature;
3. Is a Limited Company, a non-profit organization, or belongs to a self-employed person;
4. Is starting to set up new operations in collaboration with third-party entities, and some businesses inside the EU;
5. Is branded under the banner of “liberal profession.” A liberal profession refers to a list of professions that are under the governing body of the state. These are specialists in certain professional fields. Examples of liberal professions are:
   1. Lawyers
   2. Engineers
   3. Architects
   4. Doctors
   5. Dentists
   6. Accountants

What are my perks if I’m eligible?

If you are eligible, you’ll be relieved on capital goods and equipment you use for your business, including the following assets:

1. Transportation required for transferring your capital goods;
2. Livestock;
3. Tools used for the business, pieces of machinery, and office equipment;
4. Technological tools such as computers.

What are off-limits?

VAT and Customs Duty relief does not cover the following:

1. Means of transportation of the things not used in your business;
2. Any type of goods for human and animal consumption;
3. Raw materials, semi-finished products, horticultural products for sale like seeds, plants, shrubs, and fuel;
4. Livestock owned by a dealer and not the business itself.

Eligibility for Customs Duty relief

In accessing the perks of customs duty relief, eligible capital goods must:

1. Be owned and used by the business for at least 12 months before transferring to the UK;
2. Be used as the same function they offer before transferring to the UK;
3. Be reasonable and relative to the size and nature of your business;
4. Be imported from where they were previously within one year your business stopped operating.

The three and four requirements are flexible depending on extenuating circumstances. For example, if the country your business previously had a political upheaval that resulted in a stoppage of your operations, the customs could waive three and four for you.

If you believe number three and four seems impossible in your end, contact the National Imports Relief Unit.

VAT relief in importing capital goods in the UK

To be eligible for VAT relief, your business must:

1. Be involved in the production of taxable supplies;
2. Have or expecting to have a turnover of taxable which according to the “Accountancy.co,” “exceeds the UK requirements for VAT registration, or will exceed it within the next 30 days. The current threshold is £85,000;”
3. Register for VAT.

Records you must keep

1. Evidence of ownership;
2. All National Imports Relief Unit acknowledgement letters;
3. Receipts;
4. Bills;
5. Invoices;
6. Insurance documents’
7. Evidence of when, where, and how the capital goods were used and disposed of.

You’ll need additional records in case:

1. You are transferring your capital goods to another eligible entity: Keep any documentation detailing the transfer;
2. Re-exporting capital goods: Keep the New Export System declaration details and any documentation on export;
3. Your capital goods were stolen, mutilated, or lost: You’ll need police reports, insurance incident reports, or any official documentation that details the incident.